State Fund Files First-Ever Tiered Rating Plan

 

Zero Net Increase in Overall Rates

Last week State Compensation Insurance Fund announced its first-ever tiered rating plan has been filed with the California Department of Insurance. The plan will apply to policies renewing or incepting on or after September 1, 2012.

Analysis of the State Fund book of business indicated that most of their accounts will fall into the middle tier, explained Jennifer Vargen, spokeswoman for State Fund.  Approximately 17 percent of the business will qualify for the best pricing in the “A” tier with only about 4 percent falling into the bottom tier.

“This is not a price move on our part,” said Vargen, who added this allows State Fund to stretch out their pricing to better fulfill their unique mission of serving all California employers.  

“This rate filing is an important step in improving our ability to fulfill our mission,” said Tom Rowe, State Fund President and CEO. “State Fund’s role in California’s economy is to provide the state’s businesses with a strong, stable and fairly priced choice for their workers’ compensation insurance.  We expect our new pricing structure will appropriately serve more California employers.”

Although manual rates will increase for some classifications, the rate filing calls for a zero net increase in overall rates. The move will expand State Fund’s rate ranges, improving the organization’s ability to provide the right price for the right risk—a key component in its commitment to help California employers manage the cost of insurance.

State Fund underwriters will be able to start quoting under tiered rating August 1, 2012.

 

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